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Property management is the business of controlling and overseeing real estate, including residential and commercial rental properties. These professionals handle general maintenance and day-to-day operations on behalf of the property owner. They’re responsible for marketing properties, finding and screening tenants, collecting rent, and preparing units between leases. They may also handle repairs, evictions, and any problems that arise.
Professional property managers perform critical tasks throughout the leasing life cycle, from preparing a rental property, through tenant move-ins and move-outs. They can also provide referrals for legal advice, home repairs, and services that aren’t covered by the management agreement. Here are some of their key responsibilities:
Property management fees can vary substantially depending on the size of the property, number of units, and scope of service. Property owners can expect to pay one month of rent to fill vacant properties and 10% of the gross cash flow to manage the property. Investors should also account for monthly maintenance, contributions to a reserve repair fund, and early termination fees if they decide to cancel the property management contract. Evictions and other non-routine services typically cost extra.
Managing a property isn’t easy, and the job is even more difficult for out-of-state landlords. Thorough tenant screenings are the best way to prevent many common problems. Landlords should also maintain strong relationships with neighbors who can alert them if anything goes wrong. Investors who prefer a more hands-on approach should consider hiring a property manager to represent their interests.
Yes, in most states, property managers must have a real estate license to advertise rentals, show properties, sign lease agreements, collect rent, and perform other fiduciary activities. A community association manager license or similar certification may also be required for professionals who want to work for an HOA or apartment complex, although this credential is optional in most states.
Property managers differ significantly in their approach and level of expertise. It’s important for owners to screen potential candidates to ensure that they're choosing the most qualified professional. Here are a few questions to ask during the interview:
Yes, finding tenants and filling vacancies are key responsibilities for property managers. These professionals are responsible for advertising the property, and they handle all inquiries, applications, and showings. To find the most qualified tenants, managers perform background and credit checks, verify references, and confirm the applicant’s employment information, which can prevent problems and extra costs down the road.
Managing a vacation home or short-term rental requires a higher level of involvement when compared to other investment properties. Owners or managers must handle marketing, reservations, check-ins, and cleanings between stays. While a recent study by vacation rental marketplace HomeAway (now part of VRBO) reports that vacation rental income comprises about a quarter of the average rental owner’s income from investing just under 10 hours per week managing their rental, this type of hands-on involvement may not be possible for owners who live out of state or in another region. Professional property managers can assist with one or more tasks, such as cleanings and check-ins, or they can provide comprehensive management services to ensure that the property is generating revenue year-round.
Yes and no. Property managers may pay for repairs, but the cost is generally deducted from future rent payments or a reserve fund. In most cases, landlords are responsible for maintenance costs and improvements that are needed to preserve or enhance the property’s value. Management firms do coordinate repairs, and some have their own maintenance crews. They can also provide contractor referrals and handle work orders for routine repairs, such as cleaning, painting, plumbing, and changing locks between tenants. Many firms allow tenants to submit maintenance requests online, and they should also provide monthly expense reports showing owners how their money is being spent.
Yes, property managers can help to orchestrate the eviction process, from preparing the initial notices to appearing in court and working with law enforcement to ensure that the tenant leaves the property. Situations that warrant eviction include non-payment of rent, lease violations, and illegal activity. Property managers can help to determine the best course of action when dealing with problem tenants.
In most states, a property manager can sign a lease. Property owners can appoint a third party to act as a landlord by signing a contract with a management company or by giving power of attorney to a private individual. However, for the contract to be valid, the property manager must have the owner’s authorization.
Property managers aren’t cheap, but they’re a worthwhile investment in many cases. Managing a rental property requires time, experience, diligence, and attention to detail. Professional property managers can assist new landlords and long-term investors who have a growing portfolio of rentals. They’re also valuable partners for individuals who work full time, live out of state, or want to enjoy the financial rewards of an investment property without added stress and anxiety.
Unresponsive property managers cause problems for property owners and tenants. Reputable management firms should work hard for their fees. No landlord wants to hear from their tenants that the management company isn’t doing its job or is ignoring their concerns. If the manager is skipping routine inspections, accepting bad tenants, or failing to provide monthly expense reports, it’s probably time to hire someone else. Owners should interview several candidates, compare rates, and check references to find a more qualified manager.